Comparative Analysis of Transport Projects Appraisal: A comparison between the Netherlands and the United States

Cost-Benefit Analysis (CBA) is the most widely used tool for evaluating policy programs and capital expenditure. It involves estimating, where possible, the full direct and indirect private; and social costs and benefits associated with a policy action or potential project. The Netherlands is one of the countries that use CBA in transport project appraisal; and its practice is considered as state-of-the arts in transports sector. However, there are a number of issues in its practice, which can be categorized into content- and process- issues. On one hand, from the perspective of spatial-infrastructure appraisal process, content-related issues are those issues regarding all the estimations of effects and the way the effects are presented in the CBA report. On the other hand, process-related issues are those issues pertaining to the use of CBA as a supporting/supplementing tool. By comparing the way the Dutch CBA practice with the way another practice (the United States) deals with these issues, it is deemed that both countries can learn from each other. It is in the interest of the thesis to compare transport projects appraisal in several countries. However, by comparing many countries in one study through an in-depth analysis, one may struggle to analyze accordingly and make useful/practical recommendations to all the countries, due to various methods applied in these many countries. Furthermore, given the time allocated for this thesis projects, it is rather impractical to cover more than two countries in the project. Hence, the thesis is set to compare the transport projects appraisal between two countries for the purpose of improvements in both countries’ practices. The choice of a case study (country) - the United States - was made since there is long tradition of utilizing CBA in public sector decision-making; unavailability of comparative studies in this topic between the two countries; and cultural difference between the countries. Thus, the main research question is formulated as the following:- By comparing the similarities and differences in transport projects appraisal between the Netherlands and the United States, how can both countries learn from each other? The objectives of the thesis is to analyze differences and the similarities of the transport projects appraisal between the Netherlands and the United States which leads to reflections and recommendations, not just to the Dutch but also to the United States transports project appraisal. In order to achieve these goals, first, the methodology of ex-ante evaluation conducted in both countries was studied primarily through desk research, examining relevant formal reports, guidelines, legislation documents etc. These documents were put together in the frameworks of Social Cost-benefit Analysis or Combinatorial of Cost-Benefit Analysis and Multi-criteria Analysis for comparison purposes. Secondly, in order to confirm the utilization of those guidelines in transports projects appraisal, in-depth interview was conducted. Finally, comparison is made between the two countries. Regarding the methodology of analysis and with an exception of the inclusion of Reliability indicator in the Dutch CBA, the comparison shows that the main commonalities are the inclusion of the conventional transport indicators (Value of Time (VOT), Value-of-a-statistical life (VSL), Value of Injuries and air pollutant emissions), their methodological basis and degree of monetization. The differences occur at (1) the use of lower discount rate for irreversible effects in the Dutch CBA; (2) the appraisal horizon; (3) the inclusion of other plans and policies (for instance Land Use and Economy) in the American CBA/MCA practice. The main differences occur mainly regarding the use of the results in the decision-making which include (1) responsibility bodies conducting and reviewing the analysis; (2) disclosure of content of evaluation; (3) stakeholders’ involvement. Reflections and recommendations following the comparison for both countries are as the following: i. The de-briefing procedure between the technical review teams and unsuccessful applicants in the United States is an interesting procedure for the Dutch CBA practitioners as it could enhance the use of CBA in the decision-making process; and ii. Both nations can learn from each other in stakeholders’ involvement. The American practitioners can adopt the Effect Arena used in the Dutch CBA practice; and the Dutch practitioners can adopt the way the content of the evaluation is published (online) for stakeholders perusal/comments/inputs in the United States iii. For the Dutch CBA practice, it might be worth to think about adjusting the appraisal horizon project to justify the need to control uncertainties in the analysis; or at least, to ponder the reason ‘why’ it is currently set at 100 years; iv. There should be inclusion of any policies that are related/affected to/by the projects, explicitly in the Dutch CBA; v. The Dutch CBA inclusion of Quality Adjusted Life Years (QALY) and Disability Adjusted Life Years (DALY) is worthy of attention from the American practitioners; vi. The American practitioner may want to consider to include Reliability indicator in the ex-ante evaluation of transport projects appraisal as such an inclusion is suggested widely in the literature ; and vii. The American practitioners could look into the inclusion of indirect effects (agglomeration effects), such as employment, in the Dutch CBA as these effects have grown more attention in the United States nowadays.Master of Science in Engineering & Policy AnalysisTransports and LogisticsTechnology, Policy and Managemen